The Three BIG Patterns are:

1. CUSTOMER EXPERIENCE SHIFT eg Starbucks

The Three BIG Patterns are:

1. PLATFORM SHIFT eg Amazon

The Three BIG Patterns are:

1. BUSINESS MODEL SHIFT eg Zipcar, uber.

CHOOSING THE RIGHT APPROACH

(Business Model / Platform / Customer Engagement) ?

Use Business Model Innovation when : -

• Part of your business offering is over/under valued.

• Large group of potential customers cannot afford your offering.

• Not much variation in industry (in relation to business model).

• Assets in business can be restructured indifferent economic model.

• Internal business systems are strong on reliability, flexibility, value delivery.

• Profit model changes have benefit for customer and business.

CHOOSING THE RIGHT APPROACH

(Business Model / Platform / Customer Engagement) ?

Use Platform Innovation when : -

• Customers have to show considerable skill/ persistence to get problem solutions.

• A group with similar needs/ideas exists without a forum/hub for them to unite.

• Demand for a complex set of assets/capabilities exists – too difficult to meet.

• It is possible for businesses to combine and allow access to each others assets.

• It is possible to co-opt customers, competitors to ‘work for’ your business.

• There are ways to expand/extend/diversify current business offering.

CHOOSING THE RIGHT APPROACH

(Business Model / Platform / Customer Engagement) ?

Use Customer Engagement Innovation when : -

• Complaints about service and/or low customer expectations are ‘normal’.

• Many potential customers are not active in market due to poor service.

• Business models have punitive switching barriers, try to get customer ‘lock-in’.

• A different buying model/experience can be found (compared to existing).

• Engagement through values, sense of self, connections to community is possible.

• Excellence on one market can be transferred to another market.

CORE – change the known - one or two types involved – low risk and reward.- works best if the business is already a leader in that market – usually minor product improvements to existing range/same customer base.

ADJACENT – change the boundaries – three of four types involved - higher risk and reward. - reframing offering to significantly shift customer expectations / value delivery. - Can bring years of advantage by ‘resetting’ market boundaries.

eg Method – cleaners as ‘household fashion aesthetic’

TRANSFORMATIONAL- change the game – five or more types involved –high risk and reward.- market maker/ breaker affecting existing markets –may create new businesses.- big effect on customer and competitors.

eg iTunes –digital music & movies sales.

CHOOSING THE RIGHT LEVEL OF INNOVATION AMBITION

(Core /Adjacent /Transformational) ?

Use Core innovation when :-

• Business is already strong in market with products leading growth.

• Competitors are focused on product performance – other possibilities exist.

• Market has not much innovation /excitement, and has high barriers to entry.

• Cash flow is important – short term gains needed.

• Assets & capabilities already in place to drive the innovation.

• Low risk tolerance or low innovation capability in business.

CHOOSING THE RIGHT LEVEL OF INNOVATION AMBITION

(Core /Adjacent /Transformational) ?

Use Adjacent innovation when :-

• Existing offerings not showing growth, due to strong competitive pressure.

• Competitors using one/two types of innovation outside product performance.

• Market is mature/declining – need to make changes or exit.

• Need significant returns on modest investment, but can allow time to develop.

• Ability to repurpose assets, further invest for flexibility etc exists.

• Business is ready for change (risk, opportunity, new markets etc)

CHOOSING THE RIGHT LEVEL OF INNOVATION AMBITION

(Core /Adjacent /Transformational) ?

Use Transformational innovation when :-

• Dramatic growth increase needed – need for fundamental changes understood.

• Competitors increasingly active – market structure change may overcome this.

• Market is mature/declining, low barriers to entry, boundaries blurring.

• Time for major change to happen exists, radical new growth needed.

• All existing assets and capabilities are up for review / redeployment / redundancy.

• Both business offering and market served may change completely.

INNOVATION Strategy is found by combining the approach : -

Business Model Shift

Platform shift

Customer engagement Shift

With the scale /size of innovation : -

Core - ‘change the known’

Adjacent – ‘change the boundaries’

Transformational – ‘change the game’

and using innovation tactics – see handout.

IN GROUPS OF FOUR

Recommend a strategy for ONE of

a) A corner dairy in Auckland

b) A video rental business

c) A hotel in Queenstown